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Factors Setting the Tone for Marriott's (MAR) Q2 Earnings

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Marriott International, Inc. (MAR - Free Report) is scheduled to report second-quarter 2018 results on Aug 6, after the closing bell. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 7.2%.

Q2 Expectations

The question lingering in investors’ minds now is whether Marriott will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.36, higher than $1.13 in the year-ago quarter. Of late, the company’s earnings estimates have been stable. In the first quarter of 2018, it witnessed earnings growth of 40% on a year-over-year basis.

Moreover, the Zacks Consensus Estimate for revenues stands at $5,978 million, reflecting 3.2% increase from the prior-year quarter’s actual figure.

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors at Play

Solid RevPAR growth across both domestic and international markets as well as room growth drove Marriott’s results in first-quarter 2018.  This is likely to be a major growth driver in the to-be-reported quarter as well. Given a steady rise in business and leisure travel, and higher transaction volumes, Marriott is well-poised to grow in the near as well as long term.  In the last reported quarter, worldwide, system-wide RevPAR rose 2%. Earlier, the company had said that RevPAR growth during the second quarter and 2018 is likely to be in the 3-4% range. In the Asia Pacific region, Marriott anticipates RevPAR growth to increase by high single-digit rate owing to robust demand for leisure and strength across corporate.

Also, rising business and leisure travel backed by improving economic indicators and positive employment numbers along with strong transient demand is likely to drive Marriott’s performance in the second quarter. Expanding North American business and large international exposure too bode well for the company.

However, slow growth in the Caribbean and Latin American region in the second quarter after a robust first-quarter growth is concerning. Moreover, Marriott has significant international presence and is therefore highly vulnerable to fluctuations in exchange rates.

Marriott International Price, Consensus and EPS Surprise

What Does the Zacks Model Says?

Our proven model does not conclusively show that Marriott is likely to beat earnings estimates in the second quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Marriott has an Earnings ESP of -0.44% and a Zacks Rank #4 (Sell), consequently making the surprise prediction difficult.

As it is, we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some other companies in the consumer discretionary sector that have the right combination of elements to deliver an earnings beat this quarter.

Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +10.72% and a Zacks Rank #2. It is expected to release second-quarter results on Sep 9. You can see the complete list of today’s Zacks #1 Rank stocks here.

With a Zacks Rank #2, Wendy’s (WEN - Free Report) has an Earnings ESP of +1.59%. The company is slated to report its quarterly results on Aug 7, after market close.

Brinker (EAT - Free Report) has an Earnings ESP of +2.03% and a Zacks Rank of 3. The company is expected to report quarterly results on Aug 9.

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